Correlation Between American Growth and Old Westbury
Can any of the company-specific risk be diversified away by investing in both American Growth and Old Westbury at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Growth and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Growth Fund and Old Westbury Large, you can compare the effects of market volatilities on American Growth and Old Westbury and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Growth with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Growth and Old Westbury.
Diversification Opportunities for American Growth and Old Westbury
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Old is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Growth Fund and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and American Growth is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Growth Fund are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of American Growth i.e., American Growth and Old Westbury go up and down completely randomly.
Pair Corralation between American Growth and Old Westbury
Assuming the 90 days horizon American Growth Fund is expected to under-perform the Old Westbury. In addition to that, American Growth is 5.22 times more volatile than Old Westbury Large. It trades about -0.18 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.06 per unit of volatility. If you would invest 2,139 in Old Westbury Large on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Old Westbury Large or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Growth Fund vs. Old Westbury Large
Performance |
| Timeline |
| American Growth |
| Old Westbury Large |
American Growth and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Growth and Old Westbury
The main advantage of trading using opposite American Growth and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Growth position performs unexpectedly, Old Westbury can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Old Westbury will offset losses from the drop in Old Westbury's long position.| American Growth vs. Rational Strategic Allocation | American Growth vs. T Rowe Price | American Growth vs. Enhanced Large Pany | American Growth vs. Washington Mutual Investors |
| Old Westbury vs. Lord Abbett Government | Old Westbury vs. Us Government Securities | Old Westbury vs. Dreyfus Government Cash | Old Westbury vs. Goldman Sachs Government |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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